The time is now for Crown and Star merger – Credit Suisse say
The time is right for Australia’s two market leading casino operators to consider a merger, Credit Suisse analysts said.
Asgam reports that the Australian arm of the global investment bank told investors this week that bringing Crown Resorts and Star Entertainment Group together made perfect sense given the challenges each faces fighting the impacts of the coronavirus pandemic and China’s crackdown on cross-border gambling activity by its citizens.
Such a deal, Credit Suisse said, would see a new merged entity formed of which Crown shareholders could expect to hold around 54.4 per cent and Star shareholders 45.6 per cent.
It could also create an opportunity for the entity to buy back some or all of the 36.81 per cent Crown stake currently held by James Packer’s Consolidated Press Holdings, assuming an ongoing suitability inquiry in NSW demands his influence is reduced.
Crown operates two casinos in Australia, Crown Melbourne and Crown Perth, and is due to open its A$2.2 billion Crown Sydney development on December 14.
Star is currently the dominant presence in NSW via The Star Sydney and Queensland via The Star Gold Coast and it’s A$3.6 billion Queen’s Wharf Brisbane development, set to open in 2022.
Credit Suisse estimates such a merger would realise around A$1 billion in cost synergies while enabling the new entity to generate EBITDA of US$1.33 billion by FY2023, when the recovery from the pandemic is expected to be complete.
“Revenues and profits are likely to be diminished relative to pre-COVID levels to FY2023 and that, combined with regulatory pressures, may create an opportune environment for a merger between SGR and CWN,” the analysts said.
Any such deal would require regulatory approval across multiple states and may also attract interest from the Australian Competition and Consumer Commission, Credit Suisse noted, particularly given the explosive findings around Crown’s culture of compliance during the NSW inquiry.
Former Star gaming supervisor sentenced for fraud offences
A man who took gambling chips from Star Casino has been sentenced by a Sydney court.
The Daily Telegraph reported in September that Justin Ly took more than $90,000 worth of gambling chips from the casino, with the court told his scan was possible due to the complex’s poor security system.
Mr Ly will spend the next eight months locked inside his Bonnyrigg home after he was sentenced for repeatedly manipulating dealers to hand over thousands of dollars’ worth of chips.
The 23-year-old was employed as a gaming supervisor and would lie to dealers about a ‘customer’ – his criminal accomplice – who had gone to the bathroom and left behind a number of gambling chips, typically valued at about $7500.
When the ‘customer’ would return, Ly would order the dealer to pay out the ‘owed’ money in chips.
The scam was successfully executed dozens of times across months in 2019.
The court heard the scam was undertaken to fund Mr Ly’s own gambling addiction, which was already intense before he began working at the casino.
Magistrate Michael Antrum said the young man took advantage of what he believed was a “poor security system” and used his “knowledge of how the system operated.”
The Bonnyrigg man is now attending weekly sessions to address his gambling problem and is on a doctor-issued mental health plan, with a court-ordered report stating he is a low risk of reoffending.
Outside court, Mr Ly spoke of the crippling addiction which led him down the criminal path.
“Gambling is pretty bad, I guess that’s what made me do that,” he said.
Mr Ly was convicted of fraud by deception and placed on an eight-month intensive correction order, to be served by home detention.
He was also ordered to repay Star $83,500.